Taking the Bait

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40 | Th e M Rep o RT o r i g i nat i o n s e r v i c i n g a na ly t i c s s e c o n da r y M a r k e t ORIGINATION The LaTesT Household debt rises, but new Mortgages drag As student loan debt rises, fewer people are interesting in taking out a home loan. a mericans increased their borrowing in the first quarter, but little of that stemmed from new mortgage lending, accord- ing to data released by the New York Federal Reserve. The New York Fed recorded an increase of $129 billion in national outstanding household debt in the first three months of the year, bringing the total debt level up to $11.65 trillion. It was the third straight quarterly gain. Leading the increase was a rise in mortgage debt, which was up by $116 billion from the end of 2013, according to the bank. However, with originations dropping to $332 billion—the lowest level since the housing recovery started—there was little to celebrate on that front. Among other issues—includ- ing an apparent lack of loan demand and tight credit restric- tions—ongoing weakness in new lending can in part be attributed to younger consumers, who are already overburdened with debt and reluctant to take on more. As economists for the New York Fed explain in a blog post for the bank: "One pos- sible reason for the failure of student borrowers' housing and auto consumption to return to pre-recession levels is the grow- ing burden of student debt. ... Despite an 11 percent house price recovery over the course of 2013 and an increase in overall mort- gage debt, 30-year-olds with and without student loans contin- ued to retreat from the housing market." Incidentally, student loan debt was up $31 billion over the quarter and remains second only to mort- gage debt at a total of $1.11 trillion. More encouragingly, delinquen- cy rates improved across most categories compared to the fourth quarter. Among all mortgage debts, the New York Fed re- corded a 90-plus-day delinquency rate of 3.7 percent, down from 3.9 percent a few months earlier. new Purchase apps Up 5% After A disAstrous MArch showing for new hoMe sAles, MBA predicts A pickup in April. a pplications for new home purchases continued to climb in April, though at a sub- stantially slower pace compared to the previous few months. The Mortgage Bankers Association (MBA) reported a 5 percent month-over-month increase in new home purchase applications. The increase fol- lowed gains of 15 percent in March, 12 percent in February, and 27 percent in January. Based on application volumes and other market considerations in MBA's monthly Builder Applications Survey (BAS), the group estimates new single-family sales ran at a seasonally adjusted yearly pace of 419,000 in April, a pickup of 5 percent over March's revised pace of 400,000 units. March's annual pace, originally estimated at 479,000, was partly a result of re-benchmarking, MBA says. The revision brings estimated sales closer in line with Census estimates, which put new sales at a rate of 384,000 in March—a monthly decline of 14.5 percent. On an unadjusted basis, MBA estimates there were 42,000 new home sales in April, an increase of 8 percent over the prior period. The average loan size of new homes was also up, increasing more than $3,000 to $299,904. By product type, the association reports conventional loans ac- counted for 68.4 percent of April new purchase applications, while Federal Housing Administration (FHA)-insured loans made up 15.8 percent. Meanwhile, mortgages insured by the Department of Veterans Affairs (VA) and Rural Housing Services/U.S. Department of Agriculture composed 14.2 percent and 1.6 percent of April applications, respectively.

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